The Midlands and the North of England accounted for almost half of all new buy-to-let purchases by landlords in the first half of the year, according to Paragon.

The lender’s analysis of industry data found that the East and West Midlands, North West, North East and Yorkshire and Humber made up 47.4% of new buy-to-let purchases with a mortgage, up from 46% during the same period last year and from 33.5% a decade ago.

London and the South East’s share has dropped from 41.6% in 2015 to 27.6% this year.

Landlords have increasingly focused on markets in the Midlands and north, where property prices are lower, resulting in higher yields and reduced acquisition costs, Paragon says.

This trend accelerated after the stamp duty surcharge for those buying additional homes was introduced in April 2016. 

The South East (excluding London) attracted the biggest share of landlord purchases at 15.4% during the first half of the year, followed by the North West at 12.9%.

Paragon managing director for mortgages Louisa Sedgwick says: “The trend towards investment across Midlands and northern markets increased following the introduction of the stamp duty surcharge nearly a decade ago.

“These markets are appealing to landlords for several reasons, including the availability of appropriate stock, strong tenant demand, healthy local economies, lower purchase costs and generally stronger yields.”

 She adds: “The South East and London are still the UK’s most important rental markets, however, given the transient nature of these markets and their economic importance. 

“Stifled new supply against heightened tenant demand has driven rental inflation. 

“Without an increase in new stock across the South East, and in particular London, tenant choice is diminished.”